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Restoring Competition Commission’s mandate

By overturning the NCLAT order, the Supreme Court has strengthened the legislative intent towards antitrust enforcement.

New Delhi | December 28, 2020 8:41:37 pm
Corporate Affairs Ministry, CCI, Competition Commission of India, CCI strength, business news, indian express newsThe narrowing effect of the NCLAT order on the CCI’s jurisdiction attempted to redefine the reach and output of the competition authority in the country.

Written by Sanjay Pandey and Ved Mishra

December 15, 2020 saw the settling of one of the most significant chapters of competition jurisprudence in India wherein the Supreme Court restored the jurisdictional ambit of the Competition Commission of India (CCI) otherwise constricted by locus standi flowing from a ruling of the National Company Law Appellate Tribunal (NCLAT).

Generally understood, locus standi is the right or capacity of a person to bring an action or to appear in a court/tribunal. Six months ago, the NCLAT ruled in a case related to cab aggregators that anyone bringing a case/information before the CCI should have suffered legal injury as a consumer or must have lost the benefits of healthy competitive practices. This ruling in effect mandated the applicability of locus standi before the CCI. Many experts started to doubt the very existence of competition regulation as the CCI might not be able to entertain information in which the informants do not have any personal interest or had suffered any personal injury from the impugned anti-competitive conduct. Several articles in newspapers highlighted the cataclysmic effect of the NCLAT decision on the very essence of antitrust practice in India and on the Commission, which would become toothless to maintain healthy competition in markets.

The narrowing effect of the NCLAT order on the CCI’s jurisdiction attempted to redefine the reach and output of the competition authority in the country. The limiting effect it had on the ability of the CCI to take cognisance of alleged violations brought to its notice, froze the dynamic perpetration of competitiveness in the economy. In order to have more competitive markets, the catchment of CCI’s jurisdiction has to be unhindered and wider. It is known from more than 130 competition authorities in the world that more competitive markets stimulate innovation and generally lead to lower prices for consumers, increase product variety and quality, lead to greater entry and enhanced investment. The growing number of competition jurisdictions over the years, from a handful in 1970 to more than 125 in 2020, is testimony to the fact that the reach of competition authorities is globally recognised and their efficacy, jurisdictionally felt. Since the objective of a competition authority is to promote and ensure competition, it benefits all — market players, markets, consumers and the economy. This outcome of competition regulation makes the position of the competition authority very unique in the system of governance. Thus, wider the reach of competition authority, greater the benefits for the economy.

On December 15, the Supreme Court reversed NCLAT observation on locus standi and held that any person can be an informant before the CCI and one does not have to be a “consumer” or “complainant”. The reasoning and rationale has been drawn from amendments to Section 19 and Section 35 of the Competition Act, 2002. It has also been emphasised that the Commission investigates cases involving competition issues in rem which affects public interest, rather than acting as a mere arbiter to ascertain facts and determine rights in personam arising out of rival claims between parties. The duty of CCI is towards the market and the economy at large and not towards any particular informant or complainant who approaches the CCI.

In CCI v. SAIL, the apex court has dealt with the inquisitorial nature of the proceedings before the CCI and projected the latter as an expert body, distinguished from a judicial or a quasi-judicial body. In the present case, the Supreme Court has emphasised that when the CCI performs inquisitorial, as opposed to adjudicatory functions, the doors of approaching it and the appellate authority, that is, the NCLAT, must be kept wide open in public interest so as to sub-serve the high public purpose of the Act.

No doubt, in an inquisitorial set up it is not required to confine the scope of the inquiry to the parties whose names are mentioned in the information. Thus the scope of competition scrutiny under the Act is wider. Under Section 45 of the Act, the Commission may impose penalty for false information, wilful suppression, wilful alternation, wilful destruction or omission to state material facts and this may be considered a balancing feature for the wide jurisdictional coverage the CCI has. The inquisitorial function of the Commission ensures that it investigates the information received from any person or takes action suo moto in the larger interest of the public.

The statutory scheme sanctioned by Parliament endows the CCI with inquisitorial, regulatory, administrative, and adjudicatory powers which are to be exercised to fulfil the broad mandate of the Competition Act, 2002. The Supreme Court judgment in the case has settled a crucial principle of competition jurisprudence in India, without which the bite and might of competition regulation would have been constricted. In essence, the judgment has not only settled a very poignant issue, but has also strengthened the legislative intent towards the antitrust enforcement in the country.

(Pandey and Mishra are advisers, CCI. Views are personal)

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